True. That the basic form of cost-volume-profit analysis is often called break-even analysis.
What is break-even analysis?
- By comparing the costs of a new business, service, or product to the unit sell price, a break-even analysis calculates the point at which you will become profitable.
- Break-even analysis focuses on determining what number of sales will prevent losses given the fixed and variable expenses.
- In other words, it indicates the point at which you will have sold enough units to pay for all of your costs.
Fixed Costs / Contribution Margin = Break-even point
- Cost-Volume-Profit Analysis (CVP analysis), also commonly referred to as Break-Even Analysis.
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